If gold rusts …

SEC’s failure to file report for four years raises questions about its regulatory credentials

THIS must be the limit. We knew government and her agencies are remiss in giving account, sticking to rules or keeping to deadlines.

For instance, for over a decade, the Federal Government has been unable to deliver the annual budget on the age-old January deadline. The 2018 budget was signed by half-year and it bears a major lacuna – the non-inclusion of the crucial figures of the Independent National Electoral Commission (INEC). It is common knowledge that revenue-yielding MDAs (ministries, departments and agencies) often shy from submitting their budget proposals for legislative scrutiny, while rendering annual accounts have become anathema to most of them.

While the government and indeed Nigerians have lived with this aberration to the point that it has almost become a norm, it is inconceivable that a regulatory agency like the Securities and Exchange Commission (SEC) would be found on such a rogue list.

We are indeed worried at the news that SEC has not published its annual reports and accounts for the last four years. The last, according to report, was for the year ended December 31, 2013. This in itself is a violation of the Investment and Securities Act, 2007 Code of Corporate Governance.

This is a shocking revelation and a huge embarrassment for a commission statutorily charged with ensuring the best corporate governance practice and financial probity in Nigeria’s corporate environment.

SEC, which oversees the Nigerian Stock Exchange (NSE) requires all quoted firms to render report of their business and financial activities at stipulated intervals. Interim reports are rendered at the end of each quarter while a full report must be presented at the end of a 12-month operating period.

Defaulters suffer heavy penalties from SEC which range from monetary fines, suspension from trading on the exchange and in serious cases, delisting. Last April, SEC had lamented the alarming rate of defaults in timely filing of reports by quoted companies. In fact, in the last couple of years, default rate has reportedly reached about 30 per cent of quoted companies which led SEC to introduce more stringent measures.

In an editorial by this newspaper in April in support of SEC, we had strongly condemned the reprobate firms and urged the commission not to tire in being a beacon of corporate governance in Nigeria.

This is why we are worried that SEC may have lost the moral authority to hold corporate Nigeria to proper conduct. By the law establishing it, SEC is required to submit to the minister and the National Assembly, a report on the activities and administration of the commission in the immediate preceding year. The report, which must not be later than three months after the end of each year, shall include audited accounts of the commission and a report of the auditor on the account.

It is scandalous, to say the least, that the management of SEC is caught in this odious bind. Though no reason has been proffered as to why the commission has not been keeping its books and giving accounts, no reason would seem tenable under this circumstance. If reports have not been presented, they have not.

It also stands to reason that reporting procedures at the exchange may have been compromised because SEC has been a reproach to the system. It is interesting to note that if SEC were a quoted company, it would have long been delisted from the exchange.

In the last four years, SEC has named and shamed many firms, exacted huge monetary sanctions on some and most uncannily, delisted many from the exchange. This is a moral sacrilege that borders on impunity; it is unacceptable; it is repugnant to commonsense and we urge the management of SEC to do well to purge itself of this bad behaviour quickly.